## A Global Crisis Like No Other Needs a Global Response Like No Other

_IMF Blog, April 20, 2020_

## Source details

**Canonical URL:** [A Global Crisis Like No Other Needs a Global Response Like No Other](https://www.imf.org/en/blogs/articles/2020/04/20/blog-md-a-global-crisis-like-no-other-needs-a-global-response-like-no-other)

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## Bibliographic details
- Authors: Kristalina Georgieva
- Published: April 20, 2020

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### Crisis characterization and outlook
- Crisis described as:
  - "More complex, with interlinked shocks to our health and our economies that have brought our way of life to an almost complete stop;"
  - "More uncertain, as we are learning only gradually how to treat the novel virus, make containment most effective, and restart our economies;"
  - "Truly global. Pandemics don’t respect borders, neither do the economic shocks they cause."
- Outlook:
  - "We expect global economic activity to decline on a scale we have not seen since the Great Depression."
  - "This year 170 countries will see income per capita go down—only months ago we were projecting 160 economies to register positive per capita income growth."

### Immediate global policy response and IMF actions
- Global fiscal and monetary response to date:
  - Fiscal measures so far have amounted to about $8 trillion.
  - Central banks have undertaken massive (in some cases, unlimited) liquidity injections.
- IMF capacity and rapid-response measures:
  - IMF has $1 trillion lending capacity—4 times more than at the outset of the Global Financial Crisis—at the service of its 189 member countries.
  - Recognizing the crisis is global and fast-moving, IMF sought to maximize capacity to provide financial resources quickly, especially for low-income members.
- Exceptional measures taken in two months (listed by the author):
  - Doubling the IMF’s emergency, rapid-disbursing capacity to meet expected demand of about $100 billion.
    - 103 countries have approached the IMF for emergency financing, and the Executive Board will have considered about half of these requests by the end of the month.
  - Reforming the Catastrophe Containment and Relief Trust to help 29 of the poorest and most vulnerable members—of which 23 are in Africa—through rapid debt-service relief.
    - Working with donors to increase debt-relief resources by $1.4 billion.
    - Donor generosity from the United Kingdom, Japan, Germany, the Netherlands, Singapore, and China enables immediate relief to the poorest members.
  - Aiming to triple concessional funding via the Poverty Reduction and Growth Trust for the most vulnerable countries.
    - Seeking $17 billion in new loan resources.
    - Pledges from Japan, France, United Kingdom, Canada, and Australia promising commitments totaling $11.7 billion, taking the IMF to about 70 percent of the resources needed towards this goal.
  - Supporting a suspension of official bilateral debt repayments for the poorest countries through end 2020—a ground-breaking accord among G20 countries.
    - This suspension is worth about $12 billion to nations most in need.
    - Calling for private sector creditors to participate on comparable terms—which could add a further $8 billion of relief.
  - Establishing a new short-term liquidity line to help countries strengthen economic stability and confidence.
- These actions were endorsed by the International Monetary and Financial Committee at the virtual Spring Meetings.

### Risks, vulnerabilities, and additional financing considerations
- Concerns highlighted:
  - Emerging markets and developing countries experienced the sharpest portfolio flow reversal on record, of about $100 billion.
  - Commodity-dependent countries shocked by plummeting export prices.
  - Tourism-dependent countries experiencing a collapse of revenues.
  - Countries relying on remittances facing income shocks.
- IMF engagement options:
  - For emerging economies: engage through regular lending instruments, including precautionary instruments; may require considerable resources if further market pressures arise.
  - The IMF stands ready to deploy full lending capacity and to mobilize all layers of the global financial safety net, "including whether the use of SDRs could be more helpful."
  - For poorest members: need much more concessional financing as the peak of the outbreak is still ahead and significant fiscal outlays will be required.
- Debt and sustainability:
  - "More lending may not always be the best solution for every country."
  - The crisis is adding to high debt burdens and many could find themselves on an unsustainable path.
  - Need to contemplate new approaches, working closely with other international institutions and the private sector, and consider whether exceptional measures might be needed.

### Preparing for recovery — policy priorities and tradeoffs
- Policy advice must adapt to evolving realities and country-specific challenges, risks, and tradeoffs as economies restart.
- Key questions and priorities:
  - How long to maintain extraordinary stimulus and unconventional policy measures, and how to unwind them.
  - Dealing with high unemployment and "lower-for-longer" interest rates.
  - Preserving financial stability.
  - Facilitating sectoral adjustment and private sector debt workouts where needed.
- Long-standing collective challenges to address alongside recovery:
  - Reigniting trade as an engine for growth.
  - Sharing the benefits of fintech and digital transformation, which have proven useful during the crisis.
  - Combating climate change, including guiding stimulus to advance a green and climate resilient economy.
  - Calibrating social policies to reduce inequality, protect vulnerable people, and promote access to opportunities for all.

### Closing message and normative stance
- The crisis "tests our humanity" and "must be met with solidarity."
- The author urges seizing the crisis as an opportunity "to craft a different and better future together."

*Source: Kristalina Georgieva, April 20, 2020 — IMF blog post "A Global Crisis Like No Other Needs a Global Response Like No Other"*

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## References

- [عربي](https://www.imf.org/ar/News/Articles/2020/04/20/blog-md-a-global-crisis-like-no-other-needs-a-global-response-like-no-other)
- [日本語](https://www.imf.org/ja/News/Articles/2020/04/20/blog-md-a-global-crisis-like-no-other-needs-a-global-response-like-no-other)
- [Português](https://www.imf.org/pt/News/Articles/2020/04/20/blog-md-a-global-crisis-like-no-other-needs-a-global-response-like-no-other)
- [outlook](https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/)
- [$8 trillion](https://blogs.imf.org/2020/04/15/fiscal-policies-to-contain-the-damage-from-covid-19/)
- [rapid-disbursing capacity](https://www.imf.org/en/Publications/Policy-Papers/Issues/2020/04/09/Enhancing-the-Emergency-Financing-Toolkit-Responding-To-The-COVID-19-Pandemic-49320)
- [Catastrophe Containment and Relief Trust](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/49/Catastrophe-Containment-and-Relief-Trust)
- [short-term liquidity line](https://www.imf.org/en/News/Articles/2020/04/15/pr20163-imf-adds-liquidity-line-to-strengthen-covid-19-response)
- [endorsed](https://www.imf.org/en/News/Articles/2020/04/16/communique-of-the-forty-first-meeting-of-the-imfc)
- [SDRs](https://www.imf.org/external/np/exr/facts/sdr.htm/)

_Source: https://www.imf.org/en/blogs/articles/2020/04/20/blog-md-a-global-crisis-like-no-other-needs-a-global-response-like-no-other_